Correlation Between IShares MSCI and IShares Trust
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and IShares Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares MSCI and IShares Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Canada and iShares Trust , you can compare the effects of market volatilities on IShares MSCI and IShares Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares MSCI with a short position of IShares Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and IShares Trust.
Diversification Opportunities for IShares MSCI and IShares Trust
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and IShares is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Canada and iShares Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Trust and IShares MSCI is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares MSCI Canada are associated (or correlated) with IShares Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Trust has no effect on the direction of IShares MSCI i.e., IShares MSCI and IShares Trust go up and down completely randomly.
Pair Corralation between IShares MSCI and IShares Trust
Considering the 90-day investment horizon iShares MSCI Canada is expected to generate 1.19 times more return on investment than IShares Trust. However, IShares MSCI is 1.19 times more volatile than iShares Trust . It trades about 0.07 of its potential returns per unit of risk. iShares Trust is currently generating about -0.01 per unit of risk. If you would invest 3,228 in iShares MSCI Canada on August 30, 2024 and sell it today you would earn a total of 1,055 from holding iShares MSCI Canada or generate 32.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Canada vs. iShares Trust
Performance |
| Timeline |
| iShares MSCI Canada |
| iShares Trust |
IShares MSCI and IShares Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and IShares Trust
The main advantage of trading using opposite IShares MSCI and IShares Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, IShares Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares Trust will offset losses from the drop in IShares Trust's long position.| IShares MSCI vs. iShares MSCI Australia | IShares MSCI vs. iShares MSCI Germany | IShares MSCI vs. iShares MSCI United | IShares MSCI vs. iShares MSCI Switzerland |
| IShares Trust vs. iShares Trust | IShares Trust vs. iShares Trust | IShares Trust vs. Simplify Volatility Premium | IShares Trust vs. Tidal Trust II |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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